# US bank exposure to shadow banking and private credit

> Live situation record from CLSTR: https://clstr.news/situations/us-bank-exposure-to-shadow-banking-and-private-credit
> Updated: 2026-10-05T20:09:30.000Z. Sources: 4. Developments: 2.

Major US banks are facing increased risks due to significant exposure to the shadow-banking system. Data indicates that for banks with more than $250 billion in assets, lending to shadow banks rose from roughly 6-8% of Tier 1 capital in 2010 to over 76% by 2025. Credit quality in the private-credit sector has also deteriorated, with Fitch reporting a record 6.3% default rate in August 2026, particularly in the healthcare and industrial/manufacturing sectors.

In response to these developments, the Federal Reserve Bank of New York has been reviewing the private credit exposure of major institutions, including JPMorgan Chase, Wells Fargo, Barclays, and Morgan Stanley. This regulatory scrutiny focuses on risk management, collateral quality, and loan markdowns, especially regarding software loans potentially vulnerable to AI-driven disruption. Bank lending to nonbank institutions has grown from approximately $300 billion in 2016 to over $1.5 trillion, now accounting for about 11% of all bank loans.

## Timeline

### 2026-10-05: New York Fed reviews major banks' private credit exposure

The New York Fed is reviewing major banks' exposure to the $1.5 trillion private credit market, focusing on risk management and collateral quality following concerns over loan valuations and AI-related risks.

2 sources. https://clstr.news/cluster/new-york-fed-reviews-major-banks-private-credit-exposure

### 2026-09-30: US banks face rising risks from shadow banking exposure

US bank exposure to shadow banking has surged, with loans to shadow banks reaching over 76% of Tier 1 capital for large banks. Private-credit default rates hit a record 6.3% in August 2026.

2 sources. https://clstr.news/cluster/us-banks-face-rising-risks-from-shadow-banking-exposure

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Cite as: US bank exposure to shadow banking and private credit. CLSTR, https://clstr.news/situations/us-bank-exposure-to-shadow-banking-and-private-credit